FOREXAnalysis: Everyone wants to know about gold! I’m looking for a ‘tradeable low’ between 1220 and 1265. 1265 is the June 2010 high. 1250 is the extension from 1523 of the 1523-1796 range. 1220 is the 161.8% extension from 1322 of the 1322-1488 range. 1227 is the November 2009 high. There are clusters of levels at 1155 and 1045/80 as well. It’s been gold’s tendency since September 2012 to ‘crash’ for 2-4 weeks and consolidate for at least a month. Next week would be week 2 of this ‘crash’.

FOREX Trading Strategy: Looking for a low next week between 1220 and 1250. Given current market conditions, a turn would probably occur with the S&P 500 (watch 1550), and the AUDUSD (see below). I’m looking for ‘tradeable lows’. These are lows that lead to sharp advances (‘snapback’ rallies) but not the end of trends.

AUDUSD

Daily

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Snapback_Levels_for_Trading_Gold_and_Australian_Dollar_in_Focus_body_audusd.png, Snapback Levels for Trading Gold and Australian Dollar in Focus

FOREXAnalysis: Extensions of the recent AUDUSD range project .9114 (161.8%) and .8984 (200%). .8984 is of particular interest due to participants’ obsession with big round figures. If/when the market approaches .9000, expect many to proclaim terrible things for AUDUSD if it breaks .9000. The level is also home to a steep downward sloping trendline. Near term, a 4th wave rally may carry to .9277-.9313 before the final lows are registered (see 2 charts down).

Part of last week’s argument for a USDJPY low was extreme 4 week rate of change figures. We can make the same argument based on 13 week rate of change for the AUDUSD this week. 13 week ROC is at levels consistent with near term reversals. The red dots on the chart below represent 13 week ROC less than or equal to -11%. The week that ended 5/14/04 was -12.27%. The 2008 decline was interrupted by a bounce in September after 13 week ROC had reached -15.25% (go back and look at the September 2008 bounce…it was NOT immaterial). This week’s reading is -11.52%. It’s in the ballpark.

FOREX Trading Strategy: Looking for a low next week….watch the S&P 500 if it gets to 1550, especially if on Monday. This setup was discussed in detail during Friday’s DailyFX PLUS webinar.

AUDUSD

Weekly

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Snapback_Levels_for_Trading_Gold_and_Australian_Dollar_in_Focus_body_audusd_1.png, Snapback Levels for Trading Gold and Australian Dollar in Focus

FOREXAnalysis: The USDCHF rallied for 22 weeks off of the 2011 low (8/12/11 to 1/13/12) and has traded sideways for the last 73 weeks. Consolidation has lasted 3.3 times (73/22) longer than the previous trend. The low last week was registered at the trendline that extends off of the October 2011 and 2013 lows and just 8 pips below the open for the year. The USDCHF has made important lows since 2012 in a fashion similar to what is happening now. That is, price has dropped sharply into the lows and made an inside week the next week.

FOREXTrading Strategy: Long while above .9170

GBPUSD

Daily

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Snapback_Levels_for_Trading_Gold_and_Australian_Dollar_in_Focus_body_gbpusd.png, Snapback Levels for Trading Gold and Australian Dollar in Focus

FOREXAnalysis: Don’t lose sight of the big picture. A 4 year triangle (see next chart) was broken to the downside in February and price has returned to the breakout point. The GBPUSD completed an outside week. This is the first reversal from a 13 week price extreme since the week that ended 3/15 (low of the year so far). The GBPUSD is ahead of the EURUSD at this point. The GBPUSD topped in January…the EURUSD in February. The GBPUSD bottomed in March…the EURUSD in April. The GBPUSD made a high on 6/17 and the EURUSD made its high on 6/19. So it makes sense that the GBPUSD would fall apart before the EURUSD does. 5 waves down are visible from the high but when the GBPUSD turns, it tends to go quickly so beware of looking for a deep 2nd wave rally that never materializes. 1.5490-1.5529 is resistance.

FOREXTrading Strategy: If not already short, would wait for 1.5490-1.5529. Stop above pre-FOMC high of 1.5680.

GBPUSD

Weekly

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Snapback_Levels_for_Trading_Gold_and_Australian_Dollar_in_Focus_body_gbpusd_1.png, Snapback Levels for Trading Gold and Australian Dollar in Focus